For advisers, going digital is more than a Zoom meeting

“Change in the asset and wealth management industry is now accelerating at an exponential rate.” That’s the assessment of Australia’s wealth space according to a PWC report. COVID has not only triggered the move to digitisation, but it also made it ultra-competitive for financial advisers with pressures intensifying from all angles.

The industry is now very much a buyer’s market with fees pushed down by investors and regulators causing competition in the industry to rise. It’s here that disruption occurs in the traditional value chain which creates new opportunities to deliver lower-cost retail products while still providing high quality tailored advice.

In this rapidly changing industry, wealth management platform Netwealth says it’s now more important than ever to embrace new technology to digitise the client experience and realise new business efficiencies.

The platform recently released its latest AdviceTech Report, which dives into 29 “AdviceTech” technologies, used for content marketing, client education and off-platform asset management. The COVID-19 pandemic altered the traditional human-human client adviser relationship. COVID allowed the relationship to go digital via video conferencing, instant messaging and email.

Advisers have tried to replicate much of this online, but Netwealth says “replication may not be enough.” Digitisation of the client/adviser relationship “will need to consider new channels, like client portals and online self-service tools.” And that’s not even taking into consideration the younger millennial market, that will not accept a sub-optimal digital experience. With an expected $3.5 trillion to be transferred to millennials in the coming years, it shouldn’t be ignored.

In short, digitising the client experience has become a non-negotiable for advisers.

The Netwealth report lays out six areas to which advisers should be paying special attention, to help digitise their clients:

1. A digital experience is more than a Zoom meeting – There is a mismatch between the digital experience clients expect and what is being offered. Some IFAs have websites that are mobile-responsive, they send email newsletters to clients, post to social media and use tools and calculators to demonstrate strategies to clients. Two tips: Communication shouldn’t remain digital, face-to-face still has its place and digitise the client experience with client portals, so they can control the process.
2. Client data is key – Leveraging client data can hugely benefit your service proposition. Collect data and take advantage of it by bringing it together, analysing it, and creating new services that deliver better client outcomes. For example – Collecting and managing off-platform investment data as a new service offering.
3. Portfolio construction at scale with managed accounts – Managed accounts are taking over the wealth space, with one in four clients using them. The scale benefits they bring should be considered but they also bring improved business efficiency and better client outcomes through trading efficiency.
4. Don’t let the finfluencers eat your lunch – Educate clients with content market. Social media influencers are educating the market in dangerous ways by peddling high-risk products. It’s important to put your content where your clients are, and promote it to prospects.
5. The Emerging Affluent and important group of Millennials – A segment of the market with higher-than-average incomes and a strong appetite for investing. “Today, there are 1.5 million emerging affluent Australians, controlling about $2.2 trillion of household wealth.”
6. Role-model advice firms worth aspiring to – These are Netwealth’s best practices that take advantage of technology and create the best digital experience for their clients. “They combine client engagement tools like client portals and, email marketing systems and advice technologies like platforms, CRMs, managed accounts and scaled advice.”

Here are Netwealth’s list of most used suppliers:

Ishan Dan

Ishan is an experienced journalist covering The Inside Investor and The Insider Adviser publications.